HONG KONG -- iPhone audio component maker AAC Technologies is eyeing the optics market for future growth, with facial recognition, 3D sensing lenses and dual cameras set to become standard features for future smartphones.
Management at the Shenzhen-based company said on Friday it will invest an extra 200 million yuan in the fast-growing sector in the fourth quarter, in the expectation that technology upgrades to smartphones will boost its revenues.
AAC Technologies, known for producing speakers and receivers for iPhones, increased third quarter net profits by 24% to 1.37 billion yuan ($206 million), fueled by robust performance of shipments to its major clients during the period.
"We believe optics will become our next growth engine," said Richard Mok, managing director at AAC. This is despite the sector only contributing about 1% of total revenue in the first nine months of the year.
The company plans to double production of plastic lenses by the end of next year, as well as develop wafer-level glass lenses and hybrid lenses.
The high-tech lens would allow smartphone makers to apply technologies such as face recognition, dual camera, dark shot, 3D sensing and augmented reality (AR) to their new devices.
While such features are currently limited to high-end phones developed by Apple and Samsung Electronics, Mok said smaller producers are gradually adopting the technologies.
"We have seen many other brands are looking to develop these features. It is the future trend," he said, without naming any. Mok hoped sales of the company's optical products could grow about 25% next year.
During the three months between June and September, AAC's total revenue grew 27%, with sales of acoustic products gaining 17% and non-acoustic products (excluding optics) rising 29%.
While the third-quarter growth rate was lower than the market consensus and that of the previous two quarters, the company said it would be able to meet its full-year target, as slower growth was largely due to "seasonal factors" related to higher R&D costs. The company expects overall shipment growth to pick up for the rest of the year with more brands launching new models.
Analysts expect full-year profit to grow 35.3%. In the first nine months, profits rose 42% compared with the same period last year.
Hong Kong-listed AAC shares closed 3.9% higher at HK$169.4 on Friday following the results announcement during lunch break. The shares have risen by 2.4 times since the beginning of the year.